Economist Gary Shilling Warns of Possible Recession and Market Decline

Economist Gary Shilling warned that the United States may be headed toward a recession this year, citing multiple economic vulnerabilities in a recent interview reported by Jennifer Sor of Business Insider.

Shilling said a downturn appears increasingly likely due to numerous factors.

Shilling said a downturn appears increasingly likely, adding that stock markets could face a significant correction.

He suggested the S&P 500 could decline by as much as 30% in a potential bear market by year’s end. He noted that only a major fiscal stimulus or sustained consumer strength could avert a recession, though he considers both unlikely.

Among the warning signs, Shilling pointed to a sluggish housing market, with high interest rates dampening demand.

He also cited weakening capital expenditures across much of the private sector, despite strong investment in artificial intelligence.

Broader capital spending growth slowed to 3.9% late last year, down from pandemic-era highs above 20%.

Consumer spending — which accounts for roughly two-thirds of U.S. economic activity — has remained resilient but may weaken under continued financial pressure, Shilling said.